Canadian dollar drops to two-week low as commodities decline

Canada’s dollar slid to the lowest level in two weeks against its U.S. counterpart as risk appetite ebbed and commodities fell.

The currency weakened for a third day after dropping Feb. 8 as data showed employment unexpectedly dropped, the world’s 11th largest economy posted its ninth straight monthly deficit and housing starts sank to the lowest since the end of the 2009 recession. Canada’s dollar declined today against a majority of its 16 most-traded peers.

“We’re looking at residual hangover from the economic news Friday,” David Tulk, chief Canada macro strategist at Toronto- Dominion Bank’s TD Securities unit, said in a telephone interview from Toronto.

The loonie, as Canada’s currency is known for the image of the aquatic bird on the C$1 coin, depreciated 0.4% to C$1.0064 per U.S. dollar at 11:13 a.m. It reached C$1.0084, the weakest level since Jan. 28. One Canadian dollar purchases 99.36 U.S. cents.

Canada’s dollar has fallen 1.8% over the past three months among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The greenback has declined 1.1%.

Canada’s government bonds were little changed, with the benchmark 10-year note yielding 1.96% after touching 1.94% earlier, the lowest level since Jan. 28. The price of the 2.75% security maturing in June 2022 decreased 6 cents to C$106.68.

Bond Auction

The government will auction C$3.3 billion ($3.27 billion) of two-year notes on Feb. 13. The 1% securities are due in May 2015.

The loonie declined as the Standard and Poor’s GSCI Index of 24 commodities fell as much as 0.8% before paring the decline to 0.2%. Raw materials including oil account for almost half Canada’s export revenue. Futures on crude oil, Canada’s biggest export, slid as much as 0.8% to $94.97 a barrel in New York, the lowest since Jan. 23, before erasing losses to trade at $96.24.

Employment in Canada fell in January for the first time in six months, dropping by 21,900 jobs following December’s revised gain of 31,200, Statistics Canada reported Feb. 8. The unemployment rate decreased to 7%, the lowest since December 2008, from 7.1% as fewer people sought work.

Canada’s trade deficit narrowed in December to C$901 million from a revised C$1.67 billion last month as imports fell faster than exports, another government report showed Feb. 8. Housing starts plunged 19% in January to an annual pace of 160,577, Canada Mortgage & Housing Corp. said in a statement.